Analysis and criticism of America's most prominent public intellectual and champion of Keynesian economics. I am part of the Austrian School of Economics, and I critique Krugman's writings from that perspective.

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Wednesday, January 19, 2011

Robert Wenzel and the March Toward Socialism

Paul Krugman does not like to say that government control of the economy is socialism, and maybe he is correct. After all, the Nazi government controlled prices, picked "winners and losers," and directed production.

Producers got to own the property (in name, at least) and those favored producers got to be profitable, but at the expense of those people and companies that were not politically connected or simply were scorned by Hitler and his gang. We called that "Fascism." Another term might be "Crony Capitalism."

Today, we have a regime that tries to pick winners, rewards friends, and direct production to those lines favored by Washington. Call it what you will, but Robert Wenzel in this post calls it socialism. And I think he is correct.

6 comments:

I assume you are capable of a distinguishing a communist command economy (which is what most people think of when they hear the word "socialism") from a modern mixed eocnomy? (or maybe not given your past posts).

If you believe that Obama's America (a mixed economy with state interventions) is a "socialist" economy, then practically every economy on earth is also a "socialist" economy, since most are also mixed economies, and moreover they been since the 1930s.

Logically the Classical Keynesian period 1945-1979 was even more "socialist" than today given its greater numbe rf interventions, yet that era had outstanding GDP and productivity growth and low unemployment.

If that was "socialism", then the world needs more of it.

Of course, you strip the world "socialism" of serious meaning in a ridiculous way by failing to mention that a mixed economy has a massive space for private enterpise.

The fact is that the vast and overwhelming amount of the decision making in matters of production in the US, Europe, Australia, New Zealand, Canada, Japan, South Korea, or Taiwan (all mixed economies) is done in private sector, and always has been.

If you believe that Obama's America (a mixed economy with state interventions) is a "socialist" economy, then practically every economy on earth is also a "socialist" economy, since most are also mixed economies, and moreover they been since the 1930s.

Bingo.

Also, fascism is a form of socialism. Not the first thing that pops into mind when hearing the term "socialism", I agree, but it is a socialization of the economy by the means Dr. Anderson mentioned.

In the video Overview of America (http://www.youtube.com/watch?v=m_boAGNPmNQ) Fascism is defined as a system that allows private ownership of capital but the government tells the owners what they can and cannot do with it (sound familiar). Socialism is a system where the major industries are owned outright by the government. Communism is a system where the government owns everything.

The latter two aren't very different. Karl Marx, thought of as the father of socialism, titled his book "Communist Manifesto." And the communist Soviet Union was actually the Union of Soviet Socialist Republics.

I think "mixed economy" is an oxymoron. If the government controls any of the economy it controls it all--the fact that they allow you to make any decisions is at their option.

After showing the above video to two different economic classes (one last spring and one last Tuesday) I asked them, "On a scale of 0 (completely free) to 10 (completely government controlled), where do you think the US is currently?" I got answers mostly in the 6-7 range both times.

After all, the Nazi government controlled prices, picked "winners and losers", and directed production, and that was socialism, a certain variant of national socialism as opposed to international socialism.

Practically every economy on earth over the last century is also a socialist economy to some degree or another. If you wish to throw away the phrase "to some degree", then a valid terminology would be that all are/have been mixed economies, but that softens the important point that what must be opposed is the initiation of force and fraud, i.e. the socialism.

About Me

I teach economics at Frostburg State University in Frostburg, Maryland. We are located on the Allegheny Plateau, and we have cool summers and tough winters.
I am the single father of five children, four of them adopted from overseas and I have two grandchildren. My family and I are members of Faith Presbyterian Church (PCA).